Read the transcript to the Friday show

RACHEL MADDOW, HOST: A special edition of THE ED SHOW starts right now.

ED SCHULTZ, HOST: Good evening from New York. I‘m Ed Schultz and this is MSNBC‘s special coverage of the crisis in Egypt tonight.

It‘s one of America‘s strongest Arab allies and a powerful player in the Middle East. But for 28 years, it‘s been run by one man, Hosni Mubarak. His political rivals somehow only get about 2 percent of the vote in that country.

Government brutality against dissenters is commonplace—so is poverty, so is unemployment. Soaring food prices are commonplace.

And today, it looked like the people of Egypt had had enough. Will they win their freedom? That‘s the big question tonight.

Are Americans in that country in harm‘s way? And what will President Obama do?

The United States gives Mubarak‘s government about $1.5 billion every year, but President Obama tonight said he supports the cause of human rights in that country. We‘ll hear the president‘s remarks tonight.

We‘ve got reports standing by from Egypt and Tunisia. Tunisia has gone through unrest in recent days as well.

But we start tonight with NBC chief foreign correspondent Richard Engel, who filed this report from Cairo tonight.

(BEGIN VIDEOTAPE)

RICHARD ENGEL, NBC NEWS CHIEF FOREIGN CORRESPONDENT: Ed, this has obviously been a day unlike any in Egypt‘s recent memory. Thousands of people, tens of thousands of people the demonstrators say were out on the streets. They started immediately clashing with riot police and these were violent clashes.

The protesters were throwing stones. They were throwing bottles. They were throwing Molotov cocktails. The riot police, dressed in black, carrying clubs and shields, were firing back with water cannons and intense tear gas.

The entire city of Cairo felt like it was covered in tear gas. You could hardly go anywhere in the city and not have—feel your eyes like they were burning.

Now, the situation calmed dramatically when the army got involved. The police pulled back. The army moved into the streets. That‘s right about the time when President Mubarak announced a curfew was being put in place.

The people here have been almost happy to confront the police in this country. The police are not popular. They‘re associated with a lot of the petty corruption that takes place here. The army is much more respected.

When the army came in with their armored vehicles, the people celebrated them. They want the army to join their protests. That was their high point.

A low point, perhaps, when President Mubarak gave his speech. A lot of people on the ground here thought perhaps Mubarak had already left the country. They saw that they had taken the streets. The police had pulled back.

Then Mubarak came, gave a national televised address, said he was not leaving. He was offering what seems to many here a relatively minor concession to reshuffle his cabinet.

Now, tonight, tanks are on the streets. It‘s unclear what will happen tomorrow. There are some expectations of protests to resume. It is unclear how big they‘ll be—Ed.

Not everyone is honoring the curfew President Mubarak put in place overnight tonight in Egypt. And this is not the first time that people of Egypt have seen them thrown out as government.

But, in a brief statement tonight, Mubarak seemed to understand that the world is watching.

(BEGIN VIDEO CLIP)

PRES. HOSNI MUBARAK, EGYPT (through translator): I, shouldering first responsibility is to maintain the homeland security and citizen safety, cannot tolerate, cannot allow this fear to grip our people, and, therefore, I wouldn‘t allow this to haunt our future and our faith. I have requested the government to step down today and I will designate a new government as of tomorrow to shoulder new duties and to account for the priorities of the upcoming era. And I state once again that I will not be lax or tolerant. I will take all the steps to maintain the safety and security of all the Egyptians. I will safeguard the safety of people—Egypt and the aspirations of our people.

It is the duty and responsibility for which I have taken the oath to safeguard and to maintain. May god save Egypt, its people, and may he guide our steps, and may be peace be upon you all.

(END VIDEO CLIP)

SCHULTZ: Just after 6:30 Eastern Time tonight, President Obama gave a statement of his own. He spoke with President Mubarak earlier and tonight, he said he wants Mubarak to begin reform in his country. But he also wants reform to come peacefully.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My administration has been closely monitoring the situation in Egypt. I know that we will be learning more tomorrow when day breaks. As the situation continues to unfold, our first concern is preventing injury or loss of life. So, I want to be very clear in calling upon the Egyptian authorities to refrain from any violence against peaceful protesters.

The people of Egypt have rights that are universal. That includes the right to peaceful assembly and association, the right to free speech, and the ability to determine their own destiny. These are human rights and the United States will stand up for them everywhere.

I also call upon the Egyptian government to reverse the actions that they‘ve taken to interfere with access to the Internet, to cell phone service, and to social networks that do so much to connect people in the 21st century.

At the same time, those protesting in the streets have a responsibility to express themselves peacefully. Violence and destruction will not lead to the reforms that they seek.

Now, going forward, this moment of volatility has to be turned into a moment of promise. The United States has a close partnership with Egypt and we‘ve cooperated on many issues, including working together to advance a more peaceful region. But we‘ve also been clear that there must be reform—political, social, and economic reforms that meet the aspirations of the Egyptian people. In the absence of these reforms, grievances have built up over time.

When President Mubarak addressed the Egyptian people tonight, he pledged a better democracy and greater economic opportunity. I just spoke to him after his speech and I told him he has a responsibility to give meaning to those words, to take concrete steps and actions that deliver on that promise. Violence will not address the grievances of the Egyptian people and suppressing ideas never succeeds in making them go away.

What‘s needed right now are concrete steps that advance the rights of the Egyptian people, a meaningful dialogue between the government and its citizens, and a path of political change that leads to a future of greater freedom and greater opportunity, and justice for the Egyptian people.

Now, ultimately the future of Egypt will be determined by the Egyptian people. I believe that the Egyptian people want the same things that we all want—a better life for ourselves and our children, and a government that is fair and just and responsive. Put simply, the Egyptian people want a future that fits the heirs to a great and ancient civilization.

The United States always will be a partner in pursuit of that future and we are committed to working with the Egyptian government and Egyptian people, all quarters, to achieve it.

Around the world governments have an obligation to respond to their citizens. That‘s true here in the United States. That‘s true in Asia. It is true in Europe. It is true in Africa. It is certainly true in the Arab world, where a new generation of citizens has the right to be heard.

When I was in Cairo shortly after I was elected president, I said that all governments must maintain power through consent, not coercion. That is the single standard by which the people of Egypt will achieve the future they deserve. Surely, there will be difficult days to come, but the United States will continue to stand up for the rights of the Egyptian people and work with their government in pursuit of the future that is more just, more free, and more hopeful.

Thank you very much.

(END VIDEO CLIP)

SCHULTZ: Just after President Obama‘s speech today, NBC reported that Egypt had restored BlackBerry and phone service.

Joining me now is senior fellow of the New American Foundation and the publisher of “The Washington Note,” Middle East expert, Steve Clemons.

Steve, good to have you with us tonight. Thanks so much for your time.

STEVE CLEMONS, THE WASHINGTON NOTE: Thank you, Ed.

SCHULTZ: Respond to President Obama. How did he handle that? He seemed to be very evenhanded, not too strong but very clear about what he wanted. What was your analysis?

CLEMONS: I think it was as good as he could do right now. I think the problem that both Secretary of State Clinton and President Obama have is they‘re sort of saying to President Mubarak, reform fast. And one wonders, you know, why we weren‘t putting that pressure on before. And if you listen carefully to what the president said, it sounds eerily like the latter part of what he was saying about the green movement in Iran. It took—it took quite a while for the president to sort of warm up to speaking out empathetically and with sympathy and support for those that were protesting inside Iran, because he didn‘t want to mess up the, you know, possibility that things could work and turn it into an American story as opposed to a more authentic Iranian story.

And I think the president has moved more quickly this time. He‘s expressing support for peaceful assembly and stakeholder role in Egypt. But, fundamentally, he still has the problem that Egypt is a strategic ally, with key equities of the United States and particularly with the Israel relationship, and he‘s trying to walk that line. So, I think the president is a little bit trapped, even though he is trying to move Mubarak forward.

SCHULTZ: And, Steve, how secure do you think Hosni Mubarak is tonight? In Richard Engel‘s report just a few moments ago, he said that the protesters were encouraging the military personnel to join in on the protest—meaning, they have no problem with the military. They want the president of Egypt out.

How secure is he tonight?

CLEMONS: Well, it‘s very hard to say. I mean, on one hand, you see these images and I‘m reminded of Marcos leaving the Philippines and Suharto falling in Indonesia and Ceausescu in Romania. So, you can go out further.

But, remember the green movement, the Iranian regime is still there and Egypt has to some degree a far more sophisticated and possibly brutal apparatus that the state and military could use if it wanted. I think the real answer deals with where the army goes. It‘s interesting that the command staff—the chief of the command staff of the Egyptian army is in Washington or was in Washington when this all unfolded for consultations with the United States.

SCHULTZ: Is that a coincidence?

CLEMONS: I don‘t know if it‘s coincidence or not, but I‘m sure he‘s heading back. But it will matter entirely what the army does, because the army is the backbone of all power to some degree, the most organized power and instrument within the country. And if they stay with Mubarak, I find it very hard to believe that he‘ll be gone.

If they begin to tilt in another direction—the question is where do they tilt? What are the alternatives? I don‘t think the alternatives are necessarily Mohamed ElBaradei, the former head of the International Atomic Energy Agency who‘s been a real cause celebre there. And I don‘t think it‘s the Muslim Brotherhood, which is the next best organized group in Egyptian—in the Egyptian politics. But it‘s been constrained and held back.

So, where the army goes, we‘ll then know where Mubarak goes.

SCHULTZ: So much speculation, so many unanswered questions. We will examine a lot of them in this hour tonight. Steve Clemons, stay with us.

CLEMONS: Sure.

SCHULTZ: I want you to stay on with us tonight because President Obama spoke with Hosni Mubarak today. I‘d like your insight on what kind of conversation that actually was.

We‘ll be right back here on MSNBC. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: One of America‘s biggest allies in the Middle East, tonight, Egypt is in crisis, and for President Obama, this is hardly cut and dried. The dilemma for the president and the United States—right after this.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to our continuing coverage here tonight, breaking news out of the Middle East.

It‘s coming up on sunrise in Egypt right now, but protesters ignored the curfew overnight. During the day, they burned the headquarters of the ruling party to the ground. After 28 years under the rule of one man, President Hosni Mubarak, the people of Egypt are now fighting back.

As we were talking about before the break, this puts President Obama in a tough spot. The United States gives Egypt $1.5 billion a year, almost all of it, $1.3 billion, in military funding. Just $250 million for things like health and education.

So, the question for President Obama is: which side are you on? Where does the United States come down on this crisis? Of course, it‘s never that simple.

So, back with me again tonight is Steve Clemons from the New America Foundation and the Web site “The Washington Note.”

Steve, thanks for joining us again tonight. What could President Obama have said to Hosni Mubarak tonight when they spoke?

A number of Middle Eastern experts have told me that Mr. Mubarak is a pompous man, an arrogant man. He wants it his way. Sometimes, he‘s very hard to deal with. But he did speak tonight with President Obama for a half an hour.

Can you imagine that conversation?

CLEMONS: I imagine that President Obama who whether, you know, he‘s given speeches in Cairo as he did, or very well known speeches even before he was president, President Obama has a hard time with leaders that aren‘t in sync with their people and with corruption and with institutions of government that simply are there to constrain popular will than not.

I think this is a very deep and personal issue for the president and I think he talked to him leader to leader about the importance of demonstrating the fact that Mubarak was listening to the people.

That said, I don‘t think Mubarak listened to President Obama very much at all. I mean, when Mubarak made the statement that these protests which he respected were because of the freedoms that Mubarak had given his people. That was a remarkable statement in the president of Egypt‘s statement tonight.

And I think that Obama is trying to say we‘re friends. We have a strategic relationship but you have responsibilities to your people as a leader that you‘re not meeting. So, I imagine it went something along those lines. I am speculating of course. But I, you know, from my other reading of President Obama‘s comments and talks and how deeply he feels about corruption, I think that that was probably along those lines.

SCHULTZ: The story on the ground from reporters is that this civil unrest is taking place because of the social conditions in Egypt. High unemployment, food prices at near record levels. People can‘t provide for themselves. The wages are extremely low.

And this is a country with tremendous oil reserves that does very little for its people under the regime of Hosni Mubarak. He fires his cabinet, changes his government.

Is that maybe signaling that he is going to make some reform changes or can we anticipate not much change at all?

CLEMONS: I think it‘s a first step, but it may not satisfy the level of anger and frustration that‘s being vented right now. You know, in Egypt you‘ve got somewhere between 40 percent and 50 percent of the public that lives at or below the poverty line, the global poverty line at $2 a day.

And so, the gap—I mean, Egypt has been growing at 5 percent a year. It‘s got economic growth but at the micro level, you see widening disparity in income.

And so, I think these economic issues certainly are driving people and when you look ahead, the horizon that Egypt‘s youth have for jobs and opportunity just isn‘t there. And so, I think that this is one of the reasons why this is blown up. I think there are other grievances in the region, too, but this is certainly the spark.

SCHULTZ: What about our presence in Iraq and in the region? If progress is being made in Iraq, is this spilling over into Egypt and the population of Egypt sees maybe a better life somewhere else? What do you think of that?

CLEMONS: Well, I think that, you know, it‘s a real mixed bag for the United States and the region. I think they see 50,000 troops still stationed in Iraq in a very fragile situation, a government that took almost a year to come together, and I think simmering, ongoing violence and tensions. But there‘s a joke that‘s beginning to emerge when you look at some of the places where we‘re deeply engaged which is Iraq has oil and Afghanistan has the United States.

So, they see deep engagement and America is engaged, but not necessarily achieving the things that it wants—it says it is setting out to do. And while we may be looking at Iraq as a checked off box here, I don‘t think the broader Middle East is looking at Iraq as a stable and done deal. You still have a good 20 percent of the population living outside as refugees in Syria and Jordan.

SCHULTZ: Sure.

CLEMONS: So, it remains a mess. I think that as on Rachel‘s show and in Richard Engel‘s spot he did a bit earlier, I think a lot of people are saying, America is supporting a dictator. Why are you supporting a dictator?

And that, you know, is a very important question. Why are we supporting a dictator there? You know, I think as Brian Katulis of the Center of American Progress said earlier, this may be a hangover from the Cold War, but it also has to do with the kind of dynamics of how to hold a friend, one of the only friends and allies in the region, not necessarily an ally but a partner with Israel there together, and Israel and holding together some sort of stable equilibrium in that situation has made us turn a blind eye to a lot within Egypt‘s political system.

And I think that is something we need to take another look at—not undermining Israel‘s interest, Israel‘s security is key, but fundamentally, the failure to help Israel and Palestine move forward on a deal that would allow normalization with other Arab and Muslim states—

SCHULTZ: And quickly—

CLEMONS: -- is why we hold dictators in place.

SCHULTZ: And, quickly, I want your insight. What if Hosni Mubarak cannot keep control? What if he is ousted by the people?

Is that maybe one of the reasons why the United States is dealing with him, because that‘s what they have to deal with right now? And regime change may be just too tough to handle with possibly the—in terms of terrorism and all that kind of stuff?

CLEMONS: You hit the nail on the head, Ed. It‘s—if you don‘t have this government, what government do you have? Do you have Mohamed ElBaradei and renaissance style enlightenment and Jeffersonian democracy? The answer is probably not.

SCHULTZ: Yes.

CLEMONS: Do you have another strong man? Who is the strong man going to be?

Do you have the Muslim Brotherhood and political Islam rising which we‘ve done a very poor job of reaching out to and getting to know and figuring out where the good parts are and the bad parts are?

I think it‘s a big unknown and we don‘t have much planning in place for transitions in Egypt.

SCHULTZ: Steve Clemons of “The Washington Note” and the New American Foundation—thanks for your time tonight. I appreciate it.

CLEMONS: Sure thing.

SCHULTZ: Coming up next: it seems like this started in Tunisia. Did it? Is the Middle East ready for an uprising? Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to our continuing coverage on the crisis in Egypt tonight here on MSNBC.

As we wait to see what happens in Egypt when the sun comes up there today, one of the many questions here at home is whether this is part of a pattern. First, protesters in Iran tried to win their freedom and failed. Now, protesters in Egypt, Yemen, and Tunisia have tried the same thing. Is the Middle East in the middle of an upheaval?

What started this? Why are the people in the streets in Egypt? What has caused all of this?

BORZOU DARAGAHI, THE LOS ANGELES TIMES (via telephone): Well, I think the same thing that caused the people to go out into the streets in Egypt and Tunisia. It‘s all the same issues. It‘s increasingly young population, lack of political opportunities, a perception of injustice and corruption at the highest levels of government, and a lack of the tools to express themselves, a lack of freedom—freedom of assembly, freedom of speech, repressive police apparatuses.

All of these things are pretty pervasive throughout much of the Arab world to varying degrees. Every different country has a different story. But at some point, something happened in Tunisia and this wall of fear that the rulers had built around themselves collapsed in Tunisia and essentially a dictator was ousted.

It was all live on Al Jazeera and on the Internet. People saw what happened and it really inspired them. That‘s what is happening. And the sort of hollowness of these regimes has come to the fore, and people see an opportunity, a role model for using civil disobedience and political protest as a tool toward reaching political change.

SCHULTZ: So, Borzou, right now, as the day starts, another day, the question is: is the will of the people going to match that of the military might if the military is still with President Hosni Mubarak? What do you make of all of that?

DARAGAHI: Well, I think that in Egypt it‘s a little bit different than Tunisia, because the military is not as independent in Egypt as it was in Tunisia. But I also think that, to a large extent, in contrast to Iran, Egypt is a little hemmed in. They can‘t just open fire on a whole bunch of people. They are a little bit more constrained by world public opinion.

They can‘t afford a Neda Abdul Sultan, if you remember, the young lady who was killed in Iran on Youtube, and turned Iran into more of a pariah. Egypt is not able to just have its soldiers open fire on people from a political, international point of view. They‘re a little bit more accountable to world opinion.

SCHULTZ: Sorzou Darahai with us tonight from the “Los Angeles Times” He‘s reporting from Tunis, Tunisia. Is there a pattern here? Is there a movement taking place across the Middle East? Do you anticipate that this kind of stuff could continue?

DARAGAHI: Yes. At this point, I absolutely—you know, having covered the Middle East now, covered the Arab world for almost a decade, I see something that I haven‘t seen before. And I see, -- one of the most interesting things that you see is that the people are no longer afraid of the security apparatus.

Something big has happened. And actually had the benefit, the blessing of having been a young college student in 1989, living in Berlin when the wall came down. And I remember that same kind of thing in like East Germany, when I would be doing little trips to like Leipzig and Dresden, the people just stopped being afraid of the security apparatus. And that was really the end of those regimes. And that‘s what‘s happening here as well.

SCHULTZ: Sorzou, what do you think the Egyptian protesters want the United States to do? Any involvement at all? Are they watching the reaction of President Obama in your opinion?

DARAGAHI: Absolutely. I know Egypt. People are watching very closely. And from what I understand and from what I saw on social networking pages, and what I‘ve been hearing from people in Egypt, it is that they wanted a little bit more from Obama. They‘d have liked to have seen Obama kind of condemn Mubarak and call for a democracy, call for immediate change instead of what they perceived as Obama entrusting Mubarak with the process of reform.

It‘s been 30 years and the man has not made much in terms of reforms. What makes him think he is going to do reforms in the future? That‘s pretty much the sentiment on the street.

SCHULTZ: Sorzou Daragahi, appreciate your time tonight. Beirut bureau chief for the “L.A. Times” joining us on the phone from Tunis, Tunisia. Thanks for joining us tonight, Sorzou.

Still ahead, America‘s military options. What are they? Is the embassy in danger? What about Americans on the ground? Details from the former director of the defense policy under the Clinton administration and National Security Council. That‘s next. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Our continuing coverage here on MSNBC tonight; the crisis unfolding in Egypt. According to the Pentagon, there are 625 U.S. military members in Egypt deployed for security, training, and various missions. The State Department doesn‘t have an accurate count on how many American citizens are currently in that country. But they‘re urging citizens there to defer non-essential movement.

Joining me now to talk about America‘s role on the ground in Egypt going forward is former Pennsylvania Congressman Joe Sestak, who was the former director of defense policy on the National Security Council for President Clinton. He is also a former vice admiral in the United States Navy.

Joe, good evening. Good to see you again. Thanks for your time tonight.

JOE SESTAK, FMR. CONGRESSMAN: Thank you, Ed.

SCHULTZ: From a military standpoint, how important is our relationship with Egypt?

SESTAK: It‘s pretty darn important. It‘s not just that it is a strategic ally of ours in the area, but that access to the Suez Canal that Egypt gives us is absolutely critical.

But there‘s something else. And there is this relationship of our military with their military. I visited there quite a few times. But I‘ll never forget when I was in command of my first ship and I pulled into Egypt back in the early ‘90s. And a number of officers got under way with us. And when we pulled back in, one of the officers said to me, “captain, you treat your enlisted men different than we do. You treat them as though they‘re equal to you.”

I said, “well, they say yes, sir, no, sir.” He said, “no. You treat them as equal human beings. We don‘t.”

So I would argue that there is this nascent, this quiet respect for America. They get angry at us at times and disappointed. But I think you‘re going to see the security of our citizens there and our embassy to be good in the middle of this challenge, the dilemma we have out there.

SCHULTZ: Admiral, does the United States have contingency plans to get citizens out of that country?

SESTAK: Without a question. The European Command there goes through these contingency plans on a regular basis. Any fleet operations that are in that area—before they deploy into the Mediterranean, they always go through these and walk through them.

This isn‘t just Navy. This is a combination of the Air Force, with Army. This is various ways to do this. But without a question, those plans have been practiced, though through, and without a doubt dusted off again here in these last 24 or 48 hours.

SCHULTZ: Joe, you mentioned the Suez Canal. How important is it that a friendly nation that works with the United States controls that canal? Could this be a real strategic problem for the United States if it were to fall into the wrong hands?

SESTAK: Without a question. We tend to keep an aircraft carrier, for example, in the Persian Gulf day in and day out, 365 days of the year. To keep one there takes about six to seven aircraft carriers on a continuous rotation.

If we had to go all the way around the Horn of Africa, it might take us up to ten just to keep one in that Persian Gulf without breaking the op tempo we do. And how quickly we can get to a crisis is absolutely critical about that Suez Canal.

That‘s why how the president handles this, wanting stability, but nevertheless having to have to—he does encourage this movement towards democracy, for standing for those ideals which those naval officers from Egypt when they came on my ship saw, is absolutely essential. He‘s got to do both.

SCHULTZ: Well, we may not agree with the way they handle their people in that country. But the fact of the matter is we give 1.5 billion dollars a year to them. At least we did in 2010. And 86 percent of that goes to the military. Is that just a necessary evil?

SESTAK: It is. And I would say it‘s necessary. Look, part of that, quite bluntly, is so that we will have access to that Suez Canal and military way. The other point is that that military tends to absolutely—increasingly gain respect for how we are.

This is a different military, as was mentioned earlier, than Tunisia.

It is under some control. But when you walk into Alexandria, for example,

and you see their new naval base there of about ten years old, their bridge

excuse me, their gate as you enter that naval base is actually constructed to look like a United States aircraft carrier.

To some extent, our relationships, military to military, help bode Egypt to be a leader toward more peaceful resolutions of the crises we have out there in the Middle East. So that has given us, I would say, some real movement out there over the years.

Now, I don‘t know if it‘s called a necessary evil or just necessary, but it has helped us, Ed. It really has.

SCHULTZ: Senior military leaders were at the Pentagon this week for the annual bilateral defense talks. Is this a coincidence? Or would it have something to do with maybe some of the unrest?

SESTAK: No.

SCHULTZ: Would they move that up?

SESTAK: These types of getting—gatherings are planned well in advance and are executed well for a year. By the way, Ed, oftentimes in these meetings, you will find how the United States, in its own way, the U.S. military tends to let people know of other navies how we deal in civil/military relations in the United States.

And that is of value in these. It isn‘t just how can we work better together, like they came on to my ship and saw how we could have inter-operability. There are efforts we do to try to show the value of a civil/military relationship, where a civilian authority in a democratic state truly is in control of the military.

Now, obviously in Egypt it‘s an autocratic leader who is in charge of the military.

SCHULTZ: Joe, good to see you.

SESTAK: Thank you.

SCHULTZ: Former Congressman Joe Sestak of Pennsylvania and retired vice admiral in the United States Navy.

Coming up, the border—broader picture in the Middle East. What does the crisis mean for national security? That‘s next. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: I want to be very clear in calling upon the Egyptian authorities to reframe from any violence against peaceful protesters. The people of Egypt have rights that are universal. That includes the right to peaceful assembly and association, the right to free speech, and the ability to determine their own destiny. These are human rights; and the United States will stand up for them everywhere.

(END VIDEO CLIP)

SCHULTZ: The president of the United States walking a fine diplomatic line tonight in an address—in addressing the protests that have erupted in Egypt over the past few days. Before that address, the president spoke for about a half an hour on the phone with the Egyptian president.

Today, Mubarak fired his cabinet, but continues to resist calls for his own resignation.

Joining me now is Joe Cirincione, president of PloughShares, former senior vice president for the national security and international affairs at the Center For American Progress. Joe, thanks for your time tonight.

JOE CIRINCIONE, PRESIDENT, CENTER FOR AMERICAN PROGRESS: My pleasure.

SCHULTZ: A very measured and very careful response by the president tonight. Is that really the only way he can play it right now?

CIRINCIONE: You see the president, as some of your other guests have said, moving from the support that was expressed by Secretary Clinton earlier in the week, completely backing the Mubarak government, into what‘s clearly to me evidence that he‘s trying to make a transition here, trying to help the Mubarak government ease out and bring in and recognize some of the popular forces of democracy.

And the reason is this is about much more than Egypt. This is a region-wide phenomenon. If you are in a government from Tunisia to Tehran, you‘ve just had your illusions of stability shattered. If you‘re living in one of those countries with one of those repressive governments, you‘ve just had your conceptions of the possible expanded. This thing could spread in ways that most experts cannot foresee at this point.

SCHULTZ: That was really my next question. This could be the tip of the iceberg in the Middle East. Or is that an over statement?

CIRINCIONE: No. It‘s not an over statement at all. We have a direct historical parallel in the revolt—the revolutions in Eastern Europe, where you also had similar countries, with similar histories, with similar corrupt repressive regimes.

You know, and here you have similar demographics in the Arab world, similar economics. And you see these all coming together in demands for justice.

Look at the chants people are chanting in the streets. It‘s for freedom, for democracy, for dignity. This is an historic force that‘s very, very difficult to resist. Human rights advocates, pro-democracy advocates have been warning about this, that the corrupt regimes that we have backed in this region do not ultimately serve America‘s interests, that they have to be turned into pro-democratic regimes.

And if you didn‘t start the reform process from within, the people themselves would be demanded. That‘s what we‘re seeing now, the rise of a democratic movement in these countries, taking to the streets, taking history in their own hands.

Notice these are not anti-American demonstrations. There were no anti-American or anti-Israeli chants. This is about democracy, about economic freedom, about the people themselves forming the government they deserve.

SCHULTZ: Joe, stay with us. I want to bring back into the discussion tonight Steve Clemons from the New America Foundation and the website “The Washington Note.” Steve, your response to some of the things you‘ve heard in the last half hour?

CLEMONS: Well, I mostly I agree with what I‘ve heard. I guess the one exception when Joe Sestak was speaking, there are some nasty realities that are realities, that the Saudis, for instance, help subsidize Pakistani oil because we asked them to do it.

The Suez Canal is important. We‘ve organized this jig saw puzzle of relations in the region that support essentially dictatorships and totalitarian governments because they‘re doing our bidding in many cases, and that democracies may not.

Democracies are not easily necessarily moved. So what you see happening in Egypt is the veneer of democracy, the veneer of elections and national assembly—the people are saying the veneer is not good enough anymore. And I think that‘s what‘s going on. Joe‘s got it exactly right.

SCHULTZ: And, Joe Cirincione, if it‘s not Hosni Mubarak, who is it?

Who is leading these people that are out in the streets, the civil unrest?

CIRINCIONE: Well, number one, it‘s not up to us. We can‘t pick what the government is. And this is what you see President Obama trying to do, trying to shape this, trying to say—trying to get on the right side of history here to—you don‘t want to back away too quickly from one of your key allies, but you want to be inside of these basically pro-democracy movements.

You‘ve got to let this process develop. It‘s going to be messy. We don‘t know who‘s going to come to dominate, but what we do know is that our best chance to have an outcome that‘s in America‘s interest is to have a fair and open, free election.

So what you‘d like to see is Mubarak declare that he is not going to run for re-election, that he is going to step down, that he‘s not going to back his son, that he is going to recognize all political parties. And we might see Mohamed Elbaradei assume a role here that many experts have assumed that he could not.

SCHULTZ: But he really doesn‘t have much political clout in that country. Does he?

CIRINCIONE: No, he does not because he hasn‘t been there. But he is a cause celeb. You saw the—when he returned, how he was greeted at the airport. He had something, I think, like a Martin Luther King moment today, when he was in the protests hosed down by the police, water canons, in the mosque getting tear gassed.

People are going to remember that. And it‘s in our interests to be promoting people like Mohamed Elbaradei, a real democrat, a real reformer, to balance out some of the influence that the Muslim Brotherhood would have. And we don‘t know what kind of movements are going to come up.

Remember, this is Egypt. As Steve said, it‘s got some elements of democracy. It has a labor movement. It has a youth movement. There are other democratic forms that can arise if we let them and encourage them to rise.

SCHULTZ: Mr. Elbaradei, of course, won the Nobel Peace Prize for promoting nuclear disarmament. But he is under house arrest tonight. That is the report. Steve Clemons, what do you make of that?

CLEMONS: I actually think that raises his prospects and his legitimacy. I think Mohamed Elbaradei has been looked at as an outsider. I think that—you know, one scenario may be, as Joe Cirincione just described. But I happen to have been watching the Muslim Brotherhood and its activities in Egypt. And it‘s exceptionally well organized.

And you may have a lot of others come in. But in terms of political organization, it seems that Elbaradei has a tough road. If he still gets watered down, tear gassed, and thrown under house arrest it actually helps his chances of emerging as an alternative to Mubarak.

SCHULTZ: Tomorrow will be a big day in Egypt. Joe Cirincione, president of PloughShares, and Steve Clemons of the New America Foundation, thanks for your time tonight. Appreciate it so much.

CIRINCIONE: Thank you, Ed.

SCHULTZ: Coming up, what is Hosni Mubarak and Egypt waking up to this morning? And how is all of this playing out in the Arab streets? We‘ll talk to the professor of the Arab studies at Columbia University next here on MSNBC.

(COMMERCIAL BREAK)

SCHULTZ: Our continuing coverage here on the crisis in Egypt tonight here on MSNBC. According to al Jazeera, over a thousand people were injured during protests on Friday throughout Egypt. We‘ll see what happens when the sun comes up today.

Joining me now is professor of Arab studies at Columbia University Rashid Khalidi. Thank you for your time tonight, professor.

PROF. RASHID KHALIDI, COLUMBIA UNIVERSITY: Hi. How are you, Ed?

SCHULTZ: Very good, sir. What can we anticipate with the sun coming up in Egypt today? Do you anticipate that this kind of civil unrest will continue?

KHALIDI: Yeah. I think a—sort of a barrier of fear was broken today or perhaps in the last few days. And I think that the fact that the army was in the streets and was being greeted by the people has happened, and that there, in fact, was not a curfew for much of the night is an indication that we‘re likely to see more of this tomorrow.

I think one thing we haven‘t seen is what‘s going on out in the provinces. Apparently, some of the worst violence is in places like Suez and Alexandria, which are huge cities. And if Egyptian history is any indication, that is sometimes the place where these things start in a big way or come back to affect Cairo.

So, yes. I think we may well see more of this tomorrow.

SCHULTZ: Professor, how could a country with such rich oil reserves be so short on providing for its people?

KHALIDI: Well, Egypt is a country of 80 million people. It doesn‘t have a huge amount of oil. Moreover, it hasn‘t been terribly well governed. And there‘s an enormous degree of corruption. Everybody knows about the monopolies. Everybody knows about the cuts that members of the president‘s family and the other big families that are close to them are taking. That‘s part of it.

It‘s not a democratic government. I mean, the government has not at all been responsive to the needs of the people. Moreover, you‘ve had a neo-liberal agenda, which says cut subsidies, cut the social safety net, favor foreign investment, favor profits. I‘m not sure that has really led to people feeling any improvement in their lives.

SCHULTZ: And finally, Professor Khalidi, how confident are you that Hosni Mubarak can sustain power there?

KHALIDI: I don‘t think this is a regime that‘s going to be there for a very long time. It may be a matter of—it may be a long time in terms of this year. Maybe into next year. Who knows? I‘m a history professor. I don‘t talk about the future.

But listening to Egyptian television today, they look like they‘ve lost their self-confidence. I was watching the Egyptian Satellite Channel. They look like they don‘t really think they‘re going to be able to hold on.

SCHULTZ: Professor of Arab studies at Columbia University Rashid Khalidi, thanks for your time tonight.

KHALIDI: A pleasure. Thank you.

SCHULTZ: Stay with MSNBC. We‘ll continue to update you throughout the night. I‘m Ed Schultz. We‘ll see you on Monday night.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.